EUROPEAN EQUITIES ADVANCED FOR THE FIFTH CONSECUTIVE DAY lifted by bank and retail earnings, “This optimism is really feeding into the European banking sector as well. When they will start to announce their earnings, the expectations are high…” said Naeem Aslam, chief market analyst at TF Global Markets. Italy significantly cuts its 2019 GDP forecast to 0.1 percent from 1 percent and increased its budget deficit forecast to 2.5 percent, which surpasses the allotted 2.04 percent deficit issued by the European Union. Italy’s largest bank, UniCredit SpA, agreed to pay $1.3 billion to the U.S. Government pledging guilty to federal and state criminal charges using the U.S. financial system to illegally move hundreds of millions of dollars in violation of U.S. sanctions on Iran. ADI (Advantage Data Inc.) extensive corporate-bond index data showed a net daily yield increment for high-grade versus high-yield constituents. High-yield bonds edged out high-grade debt as of 3 PM, London time. Among European high-yield bonds showing a concurrence of top price gains at appreciable volumes traded, Viacom Inc. (USD) 5.875% 2/28/2057 made some analysts' 'Conviction Buy' lists. (See the chart for Viacom Inc. bonds below). Corey Mahoney (cmahoney@advantagedata.com).
Sovereign-Debt Snapshot
| Country | Maturity (Y) | Yield (%) | Previous (%) | Spread (bp) | |
|---|---|---|---|---|---|
| Australia | 10 | 1.893 | 1.869 | -66.5 | |
| Belgium | 10 | 0.495 | 0.434 | -206.2 | |
| France | 10 | 0.402 | 0.334 | -215.5 | |
| Germany | 10 | 0.059 | -0.007 | -249.9 | |
| Italy | 10 | 2.395 | 2.372 | -16.2 | |
| Japan | 10 | -0.048 | -0.059 | -260.5 | |
| Netherlands | 10 | 0.134 | 0.073 | -242.3 | |
| Portugal | 10 | 1.169 | 1.130 | -138.8 | |
| Spain | 10 | 1.053 | 1.009 | -150.4 | |
| Sweden | 10 | 0.264 | 0.228 | -229.3 | |
| U.K. | 10 | 1.214 | 1.150 | -134.3 | |
| U.S. | 10 | 2.557 | 2.498 | ... | |
Credit-Default Swap Market
New Issuance
| New Issues | New Issues [Continued] |
|---|---|
|
1. Basellandsch KTBK (CHF) 0.375% 5/13/2030 (04/15/2019):180MM Senior Unsecured Notes, Price at Issuance 100.865, Yielding .3%. |
ADI Indexes
| iShares Core EUR UCITS | iShares Euro High Yield UCITS |
| NAV as of 04/16/2019, 131.41 | NAV as of 04/16/2019, 104.55 |
| Daily NAV Change (%) +0.03% | Daily NAV Change (%) +0.11% |
OVERALL EUROPEAN CREDIT MARKET:
The euro-zone economy shows signs of positive momentum, although conditions are expected to deteriorate hindered by the termination of quantitative easing, weakening credit rating quality, and uncertainty regarding the outcome of Brexit. Closely watched indicators and rates:
- Eurostat's unemployment rate: currently 7.8% (seasonally adjusted, February 2019)
- Eurostat's quarterly GDP: 0.2% (2018 Q3 Final)
- 6-month Euribor: current value -0.231%, as of 04/15/2019
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